A survey released Tuesday tried to put a price tag on young investors' financial goals. Gen Y workers estimate it will cost more than $3 million to achieve the “American Dream,” which, according to them, means being financially secure, having freedom and owning their home, according to The Principal.
The firm surveyed retirement plan participants between 18 and 34 years old for the report. It found that almost two-thirds of respondents said they started saving for retirement by age 25.
About 80% of millennials have — and follow — a monthly budget, and two-thirds have an emergency savings fund.
“Millennial workers are clearly growing up and taking responsibility with a passion and keen focus on their financial future," Greg Burrows, senior vice president of retirement and investor services for The Principal, said in a statement. "In control of more than $10 trillion in assets, these workers have very quickly become an important group to watch.”
Unfortunately, while many Gen Y participants started saving early, some are a little unmoored. Almost half haven’t calculated a savings goal or even set an arbitrary one. Sixty-three percent plan to work past age 65.
Still, almost 80% are confident they’ll be better off financially when they reach their parents’ age.
“This generation has seen parents cope with the recession and the impact of not saving enough. Based on those experiences, they are realistic about the challenges ahead, but optimistic because they plan to take charge of their own retirement nest egg,” Burrows said.
Another survey released Tuesday found millennials are more likely than older investors to consider themselves “highly disciplined” or “disciplined” financial planners. Northwestern Mutual found more than 60% of people between 18 and 29 said they were disciplined planners, compared with 54% of those over 60.
Northwestern Mutual surveyed more than 2,000 Americans online in late January and early February for the report.
This survey confirms others’ findings that young investors tend to be conservative. Almost a third of respondents said they take a “slow and steady” approach to investing. Another 30% said they would like to be more cautious, but feel like they have too much “catching up” to do to take that approach.
In fact, the biggest barriers to creating a financial plan were not knowing where to get help and not having enough time.
Interestingly, while 14% of millennial investors said they “aim high” to get as much growth as possible, only 11% said they were comfortable with the risk associated with growth strategies.